Best and worst: Capital Shares of Split Trusts

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The Independent Online
THE CAPITAL shares of split-capital investment trusts tend to be highly geared - any movement in the stock market, either up or down, is greatly amplified, writes Caroline Merrell.

The high levels of the UK stock market at the end of last year and the beginning of this mean that, on average, pounds 100 invested in such a trust a year ago would now be worth pounds 133 - pounds 3 more than pounds 100 so invested five years ago.

Whitechurch Securities, an independent financial adviser based in Bristol, runs a fund that is entirely invested in the capital shares of split- capital investment trusts. The fund has performed spectacularly well since it was launched and Kean Seagar, the company's managing director, believes this will continue. 'Obviously capital shares are very volatile - they exaggerate market movements. But we are in the recovery phase of the economic cycle and over the long term they will do well.'

Abbey Life Investment Services manages the Yeoman investment trust. Michael Yeo, Abbey Life manager, said the fund had performed well over the last year because the board of directors had decided to decrease its exposure to equities at the start of 1994.

Deirdre Nash, fund manager at River & Mercantile American-Cap, said the fund's performance had been held back by demand for high income on the fund's income- bearing shares. She said this had meant the fund had to be more weighted to fixed-interest securities, which had held back capital growth.